Japan's core machinery orders plunge in August

TOKYO

Thursday, 09 October 2008 02:44:07

By TOMOKO A. HOSAKA -

A key barometer of corporate capital spending in Japan plunged in August to its lowest level in more than five years, the government said Thursday, as business investment retreated sharply amid fears of a broader global slowdown.

Core private sector machinery orders, which exclude often-volatile orders from electric power firms and shipbuilders, fell 14.5 percent from the previous month to 891.7 billion yen ($8.9 billion) _ the lowest value since April 2003.

The result marked the third straight month of declines and was far worse than the 3.3 percent drop forecast by Kyodo news agency.

The figures, considered an important gauge of business investment in the future, are likely to exacerbate concerns that sluggish exports are edging the world's second-largest economy closer toward recession.

A report released Wednesday by the International Monetary Fund issued a dire prognosis, slashing growth projections for the global economy and predicting that the United States _ a key export market for Japan _ would continue to lose traction.

"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said in its latest World Economic Outlook.

Compared with a year earlier and without seasonal adjustments, core orders fell 13.0 percent in August.

Orders from manufacturers slid 13.9 percent, while those from non-manufacturers declined 14.9 percent. Total orders, including those from electric power firms and ships, were down 1.2 percent.

Overseas orders rebounded in August, jumping 14.8 percent after two months of falls.